GBPUSD formed lower highs and found support at the 1.4050 minor psychological level, creating a descending triangle formation on the 4-hour time frame. Price just bounced off the triangle resistance and is now making its way towards the bottom.
The 100 SMA is below the 200 SMA, confirming that the path of least resistance is to the downside. If selling pressure is strong enough, price might even break below support and trigger a longer-term selloff for the pair. The chart pattern is approximately 400 pips tall so a resulting breakout could last by the same amount.
Stochastic is making its way out of the oversold region, with a slight bullish divergence indicating that a bounce is in order. If so, price could test the triangle resistance once more or push for an upside breakout.
The BOE decided to keep interest rates on hold and asset purchases unchanged as expected. The pound was slightly weaker after their announcement since policymakers highlighted the risks of a potential Brexit. In addition, the IMF has been looking closer into the global economic risks that this scenario could pose.
Data from the US economy has been mostly weaker than expected. The retail sales, PPI, and CPI readings all fell below expectations but the initial jobless claims showed a better than expected read.
US industrial production and capacity utilization numbers are due today, along with the Empire State manufacturing index. The preliminary UoM consumer sentiment index is also up for release.
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